Thanks to the big government that Republicans claim to hate so much, the latest banking crisis seems to be coming to a soft landing.
The Biden administration has announced that the federal government will cover the deposits of all customers who have entrusted their money to Silicon Valley Bank. That is good news for numerous tech firms and winery operations in Washington who feared SVB’s sudden collapse would wipe out their businesses.
SVB was operating in a risky sector, focusing on loans to start-ups with high chances of failure. Prudence would suggest the bank’s management team might have wanted to keep more cash around in case too many people tried to retrieve their deposits all at once, but they did not. What they did do, however, was lobby Congress to loosen the regulations imposed in the Obama years after the horrendous banking disaster of 2008. Ten years later, thanks to Donald Trump and a Republican-controlled Congress, SVB and other aggressive bankers got their wish and the regulations were relaxed.
Now, with the sudden failure of SVB and a couple of other banks, we see the predictable result. Will Republicans finally learn a lesson from this? That is highly unlikely. The loudest voices in the GOP are pushing a ludicrous assessment of the situation: SVB failed because it was too “woke.”
Meanwhile, in the rational world, Brett Greene, founder of New Tech Northwest, a Seattle-based “meet-up” community for tech, raised a good question in a Times interview: “Will the (venture capitalists) who created the crisis and the SVB executives who reportedly gave themselves bonuses just hours before the crash face any consequences?”
That question has yet to be answered, but, if the past is any guide, it seems doubtful. It is easier to imagine that the failed SVB financial geniuses, or bankers just like them, will soon be lobbying Congress for even more banking rules to be eliminated. And, if Republicans are in charge, we know how that will turn out because we have seen it over and over again.
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